Financial Inclusion

Overview

The Government of India introduced the “Atal Pension Yojana” in June, 2015. The Atal Pension Yojana is administered by the PFRDA (Pension Fund Regulatory and Development Authority) under the National Pension System (NPS). The scheme was launched to encourage individuals from the weaker section to opt for pension, which would immensely benefit them during their old age. The Atal Pension Yojana scheme can also be taken by individuals working in private sector organisations or by anyone who is self-employed. The Atal Pension Yojana scheme helps the weaker section to save up for their old age and get a guaranteed monthly pension amount.

Benefits

Fixed pension for the subscribers ranging between Rs. 1000 to Rs. 5000, if he joins and contributes between the age of 18 years and 40 years. The contribution levels would vary and would be low if subscriber joins early and increase if he joins late

Eligibilty

Any Indian Citizen who is between the age bracket 18 – 39 (age last birthday) can join the scheme through his/her Bank account

Procedure For Opening APY Accounts

Approach the branch where individual’s savings bank account is held.

Fill up the APY registration form.

Provide Aadhaar/Mobile Number.

Ensure keeping the required balance in the savings bank account for transfer of monthly contribution

1. What is Pension? Why do I need it? A Pension provides people with a monthly income when they are no longer earning. Need for Pension: i. Decreased income earning potential with age. ii. The rise of nuclear family-Migration of earning members. iii. Rise in cost of living. iv. Increased longevity. Assured monthly income ensures dignified life in old age.

2. What is Atal Pension Yojana? Atal Pension Yojana (APY),a pension scheme for citizens of India focussed on the unorganised sector workers. Under the APY, guaranteed minimum pension of Rs. 1,000/-, 2,000/-, 3,000/-, 4,000 and 5,000/- per month will be given at the age of 60 years depending on the contributions by the subscribers.

3. Who can subscribe to APY? Any Citizen of India can join APY scheme. The following are the eligibility criteria, i The age of the subscriber should be between 18 - 40 years. ii He / She should have a savings bank account/ open a savings bank account. iii The prospective applicant should be in possession of mobile number and its details are to be furnished to the bank during registration. Government co-contribution is available for 5 years, i.e., from 2015-16 to 2019-20 for the subscribers who join the scheme during the period from 1st June, 2015 to 31st December, 2015 and who are not covered by any Statutory Social Security Schemes and are not income tax payers.

4. Who are the other social security schemes beneficiaries not eligible to receive Government co-contribution under APY? Beneficiaries who are covered under statutory social security schemes are not eligible to receive Government co-contribution. For example, members of the Social Security Schemes under the following enactments would not be eligible to receive Government co-contribution: i. Employees’ Provident Fund & Miscellaneous Provision Act, 1952. ii. The Coal Mines Provident Fund and Miscellaneous Provision Act, 1948. iii. Assam Tea PlantationProvident Fund and Miscellaneous Provision, 1955. iv. Seamens’ Provident Fund Act, 1966. v. Jammu Kashmir Employees’ Provident Fund & Miscellaneous Provision Act, 1961. vi. Any other statutory social security scheme.

5. How much pension will be received under APY? Guaranteed minimum pension of Rs 1,000/-, 2,000/-, 3,000/-, 4,000 and 5,000/- per month will be given at the age of 60 years depending on the contributions by the subscribers.

6. What is the benefit in joining APY scheme? In APY, Government will co-contribute 50% of the total contribution or Rs. 1,000/- per annum, whichever is lower, to the eligible APY account holders who join the scheme during the period 1st June, 2015 to 31st December, 2015. The Government cocontribution will be given for 5 years from FY 2015-16 to 2019-20.

7. How are the contributions of APY invested? The contributions under APY are invested as per the investment guidelines prescribed by Ministry of Finance, Government of India. The APY scheme is administered by PFRDA/GOVERNMENT.

8. What is the procedure for opening APY Account? i Approach the bank branch where individual’s savings bank account is held. ii Fill up the APY registration form. iii Provide Aadhaar/Mobile Number. iv Ensure keeping the required balance in the savings bank account for transfer of monthly contribution.

9. Whether Aadhaar Number is compulsory for joining the scheme? It is not mandatory to provide Aadhaar number for opening APY account. However, For enrolment, Aadhaar would be the primary KYC document for identification of beneficiaries, spouse and nominees to avoid pension rights and entitlement related disputes in the long-term.

11.What is the mode of contribution to the account? All the contributions are to be remitted monthly through auto-debit facility from savings bank account of the subscriber.

12.What is the due date for monthly contribution? The due date for monthly contribution will be as per the initial date of deposit of contribution into APY.

13.What will happen if required or sufficient amount is not maintained in the savings bank account for contribution on the due date? Non-maintenance of required balance in the savings bank account for contribution on the specified date will be considered as default. Banks are required to collect additional amount for delayed payments, such amount will vary from minimum Re 1 per month to Rs 10/- per month as shown below: i. Re. 1 per month for contribution upto Rs. 100 per month. ii. Re. 2 per month for contribution upto Rs. 101 to 500/- per month. iii. Re 5 per month for contribution between Rs 501/- to 1000/- per month. iv. Rs 10 per month for contribution beyond Rs 1001/- per month. Discontinuation of payments of contribution amount shall lead to following: After 6 months account will be frozen. After 12 months account will be deactivated. After 24 months account will be closed. Subscriber should ensure that the Bank account to be funded enough for auto debit of contribution amount. The fixed amount of interest/penalty will remain as part of the pension corpus of the subscriber.

14.How much should I invest in APY to get the guaranteed pension of Rs. 1000?

Age of Joining

Years of Contribution

Indicative Monthly Contribution

18

42

42

20

40

50

25

75

36

25

35

76

30

30

116

35

25

181

40

20

291

All the contributions are to be remitted monthly through auto debit facility from savings bank account of the subscriber. *For detailed age wise contribution refer Annexure 1.

15.Is it required to furnish nomination while joining the scheme? Yes. It is mandatory to provide nominee details in APY account. The spouse details are also mandatory wherever applicable. Their aadhaar details are also to be provided.

16.How many APY accounts I can open? A subscriber can open only one APY account and it is unique.

17.Will there be any option to increase or decrease the monthly contribution for higher or lower pension amount? The subscribers can opt to decrease or increase pension amount during the course of accumulation phase, as per the available monthly pension amounts. However, the switching option shall be provided once in year during the month of April.

18.What is the withdrawal procedure from APY? A. On attaining the age of 60 years: The exit from APY is permitted at the age with 100% annuitisation of pension wealth. On exit, pension would be available to the subscriber. B. In case of death of the Subscriber due to any cause: In case of death of subscriber pension would be available to the spouse and on the death of both of them (subscriber and spouse), the pension corpus would be returned to his nominee. C. Exit Before the age of 60 Years: The Exit before age 60 would be permitted only in exceptional circumstances, i.e., in the event of the death of beneficiary or terminal disease.

19.How will I know the status of my contribution? The status of contributions will be intimated to the registered mobile number of the subscriber by way of periodical SMS alerts. The Subscriber will also be receiving physical Statement of Account.

20.Will I get any statement of transactions? Yes. Periodic statement of APY account will be provided to the subscribers.

21.If I move my residence/city, how can I make contributions to APY account? The contributions may be remitted through auto debit uninterruptedly even in case of dislocation.

22.What will happen to existing subscribers in Swavalamban Yojana? i. All the registered subscribers under Swavalamban Yojana aged between 18-40 yrs will be automatically migrated to APY with an option to opt out. However, the benefit of five years of Government Co-contribution under APY would be available only to the extent availed by the Swavalamban subscriber already. This would imply that if, as a Swavalamban beneficiary, he has received the benefit of government Co-Contribution of 1 year, then the Government co-contribution under APY would be available only for 4 years and so on. Existing Swavalamban beneficiaries opting out from the proposed APY will be given Government co-contribution till 2016-17, if eligible, and the NPS Swavalamban continued till such people attain the age of exit under that scheme. ii. Other subscribers above 40 years who do not wish to continue may opt out of the scheme with lump sum withdrawal. iii. Subscribers above 40 years may also opt to continue till the age of 60 years and eligible for annuities. iv. The existing Swavalamban scheme may be automatically migrated to APY